Minerals Contract Negotiation Role Play - Pacific...

SPC-EU Deep Sea Minerals Project

Minerals Contract Negotiation

Role Play

Review and Lessons Learned

March 15, 2013


Review

GROUP 1: Tongolia 1 Wannabe 1 GROUP 2: Tongolia 2 Wannabe 2 GROUP 3: Tongolia 3 Wannabe 3 GROUP 4: Tongolia 4 Wannabe 4

CIVIL SOCIETY GROUP (CSO) Meetings w/Groups 1 & 3

ROLE PLAY: Minerals Contract Negotiation


March 13, 2013 Schedule


Time Govn’t/Company CSO

10-11:30 Appoint Team Positions Review Term Sheet Prepare Negotiation Issues

Appoint team positions/Compile Strategy/Prepare Questions

10:30 Commence Govn’t/Company mtgs

11:30-1:00 Conduct Negotiation Meeting 1

Identify Issues/Prepare Press Release

1-2:00 LUNCH LUNCH

2:00-4:45 Conduct Negotiation Meeting 2 Prepare Final Term Sheet

Share Press Release TV Interviews Prepare Final Presentation


Review: Where were Negotiations Conducted ?


LOCATION

Preparation

Negotiations

Group 1 Group 2 Group 3 Group 4

T1-ConfRoom Back Left

T2-Middle of Conf Room

T3-Cafeteria under Window

T4-Middle of Conf Room

W1-ConfRoom Back Right

W2-Cafeteria against wall

W3-Conf Room Front

W4-Separate Room behind reception

SEPARATE ROOM BY CAFETERIA

SEPARATE ROOM BY CAFETERIA

W3 PREPARATION SPACE

SAME ROOM AS W4 PREPARATION


Observations about where Preparation for Negotiations were conducted

1.Main Conference Room (chance to be overheard?) a. Middle (2) b. Front c. Back Left d. Back Right 2.Cafeteria (hot? Poor acoustics? Traffic?) a. Against wall b. Under window 3. Separate Room (well done!)



Observations about where Negotiations were conducted

1.T1 immediately secured air conditioned room by cafeteria (“comfort”)

2.W 2 directed negotiations into air conditioned room by cafeteria (“fortunate default”)

3.W3 remained in preparation location (“laissez faire”)

4. T4 presumption that its separate preparation location would continue to be used (“home advantage”)



Review: Who Conducted the Negotiations?


PARTIES Group 1 Group 2 Group 3 Group 4

TONGOLIA

Team Coordinator PM Advisor Sr. Mines Officer Legal Advisor Min of Environmt

Atty Gen Off Explor/Geolog Min of Nat Res Min of For Aff Environ. Advisor Finance Advisor

Atty Gen Off Min For Affs Min Finance PM Office Min Nat Res

Atty Gen Office Min Dept Lawyer Tech Advisor PM Chief of Staff Crown Prince

WANNABE

Economist/Geolog Legal Advisor Mines Officer Geologist/Tech Community Dev

Company Pres. Legal Advisor Financial Adv Environmt Adv Secretary Media Spokesp

Team Lead 3 Directors Daughter of Owner!

Team Lead Legal Advisor Subsidiary Dirs: - Tongolia - North America - South America - Africa


Observations about who conducted the Negotiations

1.Legal 2.Mining/Geologist 3.Finance/Economist 4.Environment/Natural Resources 5.Community Development 6.Company Directors 7.Crown Prince 8.Prime Minister’s Office



Whom Should/Does Conduct the Negotiation


Technical Specialists (Both Parties)

Mining, Tax Lawyers

Mineral Economist

Engineer, Geologist

Environmental

Social responsibility

On behalf of Government

Ministry of Mines Ministry of Finance Ministry of Foreign Affairs State Mine Company Outside advisors

On behalf of Company

Company mgmt (not usually the mine

management)

In-house and outside advisors


Logistics: General Observations

1. Introductions Tea, flight, “hello” 2. Minutes W2 followed by T2 3. Development of Schedule W2 4. Use of Schedule ??? 5. Due Diligence Sheet T3 6. Use of “breaks” T1 and W1 7. CSO Consultations T1 initiated W2 requested 8. Typed Term Sheet W2



Approaches to Negotiations: General Observations


Description Example

Matter of Fact “This is standard industry practice”

Reiteration Repetition and modification, repetition…

Empathy “I want to agree but the Board/Government says”

Polite “Sorry, but we cannot accept that”

Off-Kilter Good guy/Bad guy

Threatening “We’ve spoken to the CSOs and told them ….”

Hard-line Adamant, “showstopper”, not possible

Avoidance “We’ll have to get back to you”


General Observations

1. Language “I”, “we”, “us”

2. Seating arrangements Circle/directly across

3. Introduction of Company Too late by negotiation

4. Use of the Term Sheet Term by Term

5. Use of Advisors During Preparation

6. Use of Honest Broker Only Group 1



Lessons Learned?: General Observations

1. Preparation matters

2. Location matters

3. Schedule matters

4. Members of the Team matter

5. Respect matters

6. Key Terms prevail over All Terms

7. It’s NOT personal



Concluding Observations

• Amazing individual, team and group effort

• Powerful results in less than a day

• Good negotiation does not equal debate

• Identification of key issues will focus the negotiation

• All working to same level; let’s raise the bar

• Be prepared to walk away



SAMPLE Term Sheet: General Observations

1. All Teams went line by line (“all trees, no forest”).

2. No team requested extension of deadline (opportunity lost).

3. One Team “officially signed” the Term Sheet (details).

4. Mining fiscal regime may be more deeply studied (knowledge is power).



Role Play: General Observations

1. A useful tool to better understand another party’s situation.

2. Requires understanding self, your team and the other team.

3. A tool that may be used for a variety of DSM training.



What was the General Purpose of the Negotiation?

Was it to....

provide an opportunity for the Parties to identify and finalize how specific issues will be addressed , ensure

clarity of mutual understanding, and to secure optimal benefit from the Minerals Contract?



Was the Optimal Objective of Negotiation Achieved?

To provide both Parties with a fair deal that balances

both interests and provides predictability but is sufficiently flexible to adopt to reasonably changed

circumstances during the life of the contract for mutual benefit.



Be Prepared and Good Luck!


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